By Key Points
- $7 Million Lost in Loopscale and Term Finance Hack Shocks DeFi
- Loopscale lost $5.8M due to a collateral pricing issue.
- Term Finance lost $1.5M from a faulty oracle update.
- Both incidents occurred on April 26, 2025.
- Nearly $2B lost to crypto hacks this year, says DeFiLlama.
The DeFi world was shaken again this weekend as hackers exploited vulnerabilities in two major platforms, Loopscale and Term Finance, draining over $7 million combined. As security concerns mount, 2025 is shaping up to be another rough year for crypto enthusiasts and investors alike.
On April 26, the Solana-based platform Loopscale suffered a massive exploit, resulting in the loss of about $5.8 million worth of USDC and SOL from its vaults. Shockingly, this breach came just two weeks after Loopscale’s much-anticipated launch.
According to Loopscale’s co-founder, Mary Gooneratne, the hacker manipulated the system to secure under-collateralized loans. The issue was traced back to an isolated flaw in Loopscale’s RateX-based collateral pricing system—not RateX itself.
In a statement, Loopscale clarified:
Update: Loopscale has re-enabled loan repayments, top-ups, and loop closing. All other app functions (including Vault withdrawals) are still temporarily restricted while we investigate and ensure mitigation of this exploit.
The root cause of the exploit has been identified as an… https://t.co/Pk2pMx8UcK
— Loopscale (@LoopscaleLabs) April 26, 2025
Following the attack, Loopscale paused all market activities to evaluate the damage. While some services like loan repayments and top-ups are now operational again, vault withdrawals are still frozen.
In an effort to recover the stolen assets, Loopscale offered a 10% bounty to the attacker under a whitehat agreement. They urged the hacker to return 90% of the funds by April 28 or face legal action.
Loopscale has also enlisted the help of security experts and law enforcement to further investigate and possibly retrieve the lost funds.
The situation bears similarities to the massive El Salvador Bitcoin Holdings strategy, where managing risk plays a huge role in securing assets long-term.
Term Finance Hit by $1.5 Million Liquidation Flaw
While Loopscale dealt with its breach, Ethereum-based Term Finance also fell victim to a critical error the same day.
Blockchain security firm TenArmorAlert flagged two suspicious transactions that led to around $1.5 million in losses. The problem stemmed from a faulty update to Term Finance’s tETH oracle, impacting its liquidation process.
TenArmorAlert commented:
🚨TenArmor Security Alert🚨
Our system has detected 2 suspicious transactions involving @term_labs on #ETH, resulting in an approximately loss of $1.5M.
It appears that something is wrong with the liquidation. Someone spent a very small amount of ETH to liquidate over 586…
— TenArmorAlert (@TenArmorAlert) April 26, 2025
Luckily, no smart contracts were exploited, and the vulnerability was contained within the tETH market. Term Finance moved quickly to reassure users that all other funds were safe and announced a full reimbursement plan for affected users.
These events unfold as Bitcoin markets show volatile patterns, including surprising Bitcoin Whale Accumulation trends that hint at growing institutional interest despite the persistent risks.
The Loopscale team has sent the following message to the address of the exploiter:
We are aware that you exploited a vulnerability in Loopscale’s pricing system earlier today. We are working closely with law enforcement, security firms, exchanges, and bridge protocols, to… https://t.co/MCoGpyxRB4
— Loopscale (@LoopscaleLabs) April 27, 2025
DeFi Security Faces Growing Pressure in 2025
With Loopscale and Term Finance added to the list of hacked platforms, the DeFi sector has suffered nearly $2 billion in losses so far in 2025, according to DeFiLlama. These events raise serious concerns about whether DeFi yields are worth the underlying risks.
The broader market has also been turbulent. Recently, major Bitcoin and Ethereum Options Expire, bringing sharp price moves and liquidity challenges, especially for smaller DeFi projects.
Notably, the current surge in altcoin activities like the SUI Token Soars 62% Amid Rumors of Pokemon NFT Game shows that innovation and hype still dominate parts of the crypto space despite security fears.
Tim Haldorsson, founder of Lunar Strategy, questioned if DeFi returns still justify the risks:
“We are chasing yield, but hack-adjusted, is it actually better than just holding bonds?”
This sentiment echoes broader market strategies suggesting a Bitcoin Breakout May Be Closer Than You Think, as investors reconsider their risk appetite in a rapidly changing market.
What's your reaction?
